Disability Insurance for Medical Students and Residents: RBC vs Canada Life

What Changed in RBC’s Student Disability Programs and Who It Affects

When you leave school, there’s a special arrangement, and at RBC that arrangement got smaller on October 1: the minimum age for anyone in medicine went to 26, and the Student Savings Program discount for medicine dropped from 25% to 10%. It applies to applications received on or after that date, with no exceptions, while a policy already in force keeps the terms it was issued with.

The 25% to 10% cut only matters if you’d have used the Student Savings Program. On the coverage I illustrated, it works out like this.

Whoever has the policy has a very cheap policy because they did it when they left school. But they’ve also been paying, likely for a very long time. Either way, a policy RBC issued under the old rules keeps its original terms, and this change only touches new applications.

If your plan includes a long break after training, or starting practice outside Canada, don’t build your coverage around that window. Set the amount while you’re still in the program, then use the regular future income option later, if it’s on your policy, which RBC describes as available regardless of your health as long as your income supports the increase.

Other professions in RBC’s program, such as accountants, engineers, lawyers and pharmacists, can still get up to 25%, but only on The Professional Series and Preferred Business Overhead Expense policies. If the reduced-rate critical illness option was part of your plan, it’s worth seeing how critical illness and disability insurance differ before you replace it.

What Canada Life’s StartRight Program Offers Physicians in Training

Disability insurance is based on the income that you’ve actually shown, and a medical student or resident hasn’t shown the income they’re about to earn. Canada Life’s StartRight program works around that for physicians in training: at each stage it sets a monthly benefit you can buy without proof of income, with a 20% premium reduction that may stay for the life of the policy.

Disability is financially underwritten, so it’s not just the health side, they financially underwrite as well. The program takes the financial part off the table up to your stage’s limit; the health part stays, and under age 40 the amount you pick decides which tests come with it. If there’s something in your health history, see how disability insurance works with a pre-existing condition before you apply.

The future insurability is very cheap to add on, and your billing at 35 is going to be very different than even at 45, which is the point of having it. For physicians, the program adds these pieces on top of the 20%:

For a resident, the bigger amounts come at graduation, either through that one-time increase on a policy you already have or by applying in the graduate category.

These terms cover applications Canada Life receives from September 1 to August 31 of this program year, and Canada Life can change them for the next one.

RBC vs Canada Life for Residents: What Two Real Illustrations Show

These days Canada Life is coming in price cheaper than RBC, and for a resident that held up when I ran both after October 1: the same 29-year-old came to $150.06 a month for core coverage at Canada Life and $171.42 at RBC, each after its program discount. RBC’s five waived months change the early years, not the long run.

Sometimes companies get aggressive, and in those cases I reach out to clients and say, hey, this is a unique opportunity. Before discounts, these two premiums were about $3 apart, so nearly all of the gap is the size of each program’s discount.

If you expect to keep this policy past your first few years of practice, the lower monthly premium matters more than the free months. If year-one cash is what’s tight, the waiver does its work right then.

I just want to be careful not to compare them on price alone, because they are not really apples-to-apples contracts. Four differences sit behind those numbers:

If you want this run on your own age, stage and riders, get a disability insurance quote and I’ll lay both carriers out side by side the same way. For where other insurers fit, see how other disability insurers in Canada compare.

Should Your Resident Plan Count Toward Your Coverage?

Find the package you have from work and email that to me, because disability is the only one that has integration, and I don’t want you paying for something you don’t need to have. With Canada Life it matters most if you’re in a mandatory resident plan such as PARO: you choose whether that plan counts toward your limit, and the choice can’t be changed until the resident plan ends.

Any other resident coverage is underwritten under Canada Life’s standard rules, and its guide says your limit may be reduced by the amount of that coverage. RBC’s program notices don’t address resident plans at all, so ask how RBC would treat yours before you compare the two.

My first questions about any group plan never change, and a resident plan gets the same treatment:

• What is the waiting period?
• What is the benefit period?
• Is it maxed out, and at what amount?
• Is it based on base coverage only?
• How long does it pay under your own occupation?
• When does it end?

For the bigger picture on stacking a group plan with an individual one, see why group disability coverage might not be enough. In Ontario, once residency is behind you, see how OMA coverage compares with an individual policy.

Own Occupation and Future Insurability: The Riders That Matter for Physicians

You definitely want to make sure to have own occupation; it’s a must for physicians, because it decides whether you’re paid when you can’t practise but could still do other work. Future insurability is the other one that matters for a resident, because it lets you raise your coverage later without new medical evidence as your income catches up.

Residual disability just means that, let’s suppose you’re working 20% of the time or 50% or 80%, it still covers you for the difference. It’s the one that pays during a gradual return, when you’re back but not back to full income.

You don’t want the benefit just to be stagnant. You want it at least increasing by inflation, because a claim that starts at 29 could be paying for decades.

Future insurability provides the ability to apply for additional coverage in the future without new medical evidence, subject to income and financial eligibility at that time. For a resident there are three ways above today’s limit, and each asks you to prove a little more:

If the budget gets tight, own occupation is to me the essential one to have with a disability policy for any professional, so trim the amount before you drop it. For the wider picture on definitions and riders, see our guide to disability insurance in Canada.

Return of Premium vs Waived Premiums: What Comes Back and When

On Canada Life’s return of premium rider, you’re paying more for it, significantly more, but every eight years you get back 50% of the premium you put into it, provided you’ve claimed little or nothing in that time. RBC’s waived premiums work the other way. It skips your first five monthly premiums at no extra cost, and nothing comes back after that.

Canada Life’s program doesn’t waive any months. Its money-back feature is this rider, and you pay for it. So the way to judge it is to calculate backwards: what the rider costs over eight years, held against what comes back.

Why does more come back than the rider costs? Because the refund is half of everything you paid in those eight years: the base coverage, the other riders, and the return of premium rider itself. It’s worked out on the yearly premium, though, so paying monthly costs you more and the refund doesn’t grow to match.

Cross that line and nothing is paid on that anniversary. The next refund then waits for another eight straight years that meet the conditions, so a long claim in year three moves the next payout from the end of year eight to the end of year eleven. The premiums from those first three years never come back.

So the real decision gets made at the start. When an established physician was deciding whether to keep or cancel an older policy that carried this feature, this was my advice:

The same idea turns up in life insurance, usually sold as money back life insurance, and it’s worth calculating backwards there too.

Whether the rider suits you comes down to two questions. Will you keep this policy through full eight-year stretches? And can you carry the extra cost through residency without trimming coverage you actually need? On your quote I’ll show it to you both ways, so you know we had that conversation.

Adding Life and Critical Illness Insurance Comes With a Deadline

Critical illness is just a lump sum, one and done, and life insurance is a lump sum for the people you leave behind. At Canada Life, both can be added without new health evidence, but only if you ask on your disability application and take them up in time: critical illness within six months of the policy issuing, life within a year. Disability is what replaces your income. Critical illness offers some relief, but it doesn’t address long-term income not being there at all, so it goes on top of disability coverage, not in place of it.

RBC’s student programs dropped critical illness for new applicants on October 1, and RBC’s program notices don’t mention a life insurance offer. If RBC is carrying your disability coverage, ask before assuming either can come along with it.

Because the price is set on the day you take it up, leaving it to the last month can mean paying for a birthday. There’s a bigger reason not to sit on it, and it’s the one I gave a family physician early in practice:

The program’s edge is that the underwriting is already done. Another carrier may price the same coverage differently, but it will underwrite you on its own, so if you need more than $1 million or want to see the market first, compare term life insurance quotes and critical illness insurance quotes before the window closes. And if you’re still deciding whether a lump sum belongs in your plan at all, start with our look at whether critical illness insurance is worth it.

Where the Rules Change for Physicians Trained Abroad, Dentists and Optometrists

For a physician trained abroad, what changes most is income proof, which is why I apply for the maximum amount to begin with, and then we can scale back. For dentists and optometrists, it’s the occupation class you’re rated in and a one-time window to increase coverage around graduation.

Physicians trained abroad

Canada Life and RBC both treat a physician trained abroad differently from a resident here, starting with the discount. Canadians who studied medicine abroad and come home to practise are the exception, and Canada Life treats them as grads.

The shortfall was timing, not a lack of professional history, stability or earning capacity, and I said so in the cover letter. Canada Life said it may reconsider both amounts once twelve months of earnings show on a tax return or financial statements.

Both policies also went on with the future insurability option, so an increase won’t need new medical underwriting, though the income still has to be proven. I’d usually revisit it once there are about six months of higher earnings through the corporation. Life insurance has its own rules for newcomers, covered in our look at life insurance for new immigrants.

Dentists and optometrists

Canada Life rates general dentists two occupation classes below physicians, and the gap shows up in both the price and the program discount. Dental specialists and optometrists sit with physicians in the top class.

• Dentists: a one-time increase to $3,500, or $7,500 if specializing, within six months after graduation, and only if CDSPI group coverage is being replaced.
• Optometrists: a one-time increase to $4,500, from six months before to six months after graduation, if any group coverage is being replaced.
• Neither increase needs new medical evidence or proof of income, and both are program features rather than terms written into the policy.

RBC’s notice extends up to 25% to “accountants, engineers, lawyers, pharmacists and other select occupations” without naming dentists or optometrists, so ask which rate applies before you compare. If you’re keeping CDSPI instead of replacing it, you give up the one-time increase, and Canada Life can add a group complementer rider once your combined coverage passes $3,500, or $7,500 if specializing. Weighing CDSPI’s life insurance too? Here’s CDSPI versus independent life insurance for dentists.

What to Settle Before You Apply for Disability Insurance

Rather than blindly apply, go to a couple of carriers and hear their feedback prior to submitting, especially if there’s any health history on your file. Then settle your waiting period and benefit period, which are hard to improve once the policy issues, and leave any coverage you already have alone until it does.

Give the underwriting desk the full particulars up front: dates of diagnosis, treatment, follow-up results and how you’re doing now. A thin summary comes back with questions instead of an answer, and replies can take a week or two, so start well before any program deadline you’re working to.

Age is the one thing that changes this. “If you’re 45, I might say differently. But at 35, you’re talking the difference between 30 years and 20.” As each year goes on, those years keep dwindling, which is one more reason not to wait until residency is over.

One more rule: if you already have coverage, whether a resident plan, an association plan or a policy from another country, don’t cancel it until the new policy is issued. With two physicians trained abroad who already had coverage from home, my reasoning for keeping it in the meantime was simple: “Because I would want the paperwork issued on it.”

A prelim costs you nothing but a week or two, while a decline is something applications will keep asking about. If one has already happened, here’s what to do after an insurance decline, and if life insurance is next, here’s how a mental health history is assessed for life insurance.

Common Questions About Disability Insurance for Residents

The irony is that as you get closer to 65, your premium is higher: if something happens at 60, they’re going to pay you for five years, but if it happens at 35, they’re paying you for thirty years at a much lower premium. That’s the thread through most of what residents ask, and the short answers are below.

How can we not put aside a few thousand dollars a year to protect what might be earning potential of hundreds of thousands, if not millions, of dollars? For a resident, the hard part isn’t that decision. It’s choosing between two programs that both changed for this program year, with contracts that don’t line up neatly.

Regardless of what any agent or advisor states, the wording in the policy is what matters most. I’ll put RBC and Canada Life side by side for your stage, your resident plan and your health history, run a prelim first if anything needs one, and walk you through anything I’d leave out, so nothing surprises you later.